Stanford-backed micro public finance platform Neighborly has paused the payroll in a concerted attempt to restructure the business and avert insolvency.
Neighborly, a US-based public finance platform backed by Stanford University, has suspended payments to its staff having failed to secure funding to remain solvent in its current form, Bloomberg reported on Tuesday.
Citing an internal memo, Bloomberg claimed Neighborly chief executive Jane Wilson had told employees to cease their work and warned they may not receive compensation.
Founded in 2012, Neighborly operates a municipal debt platform that helped state and local governments borrow money from investors keen to invest in their local communities. The company broke from widespread practice by offering bonds in modest increments to facilitate small-scale, community investments.
Neighborly was credited as senior manager on just 12 municipal-bond transactions mostly worth less than $20m, according to Bloomberg, and Wilson had recognised the need for job cuts and to diversify beyond state and local infrastructure bonds.
The hope is that suspending the wage bill will give Neighborly headroom to complete the restructuring, however Wilson refused to back its chances of averting bankruptcy despite insisting investors were “excited” by the opportunities ahead.
Stanford University took part in a $25m series A round for Neighborly in 2017 co-led by venture capital firm 8VC and impact investment firm Emerson Collective with contributions from Sound Ventures, Maven Ventures and Bee Partners.
Govtech Fund, Abstract.vc and Fintech Collective also supplied funding, following a $5.5m seed round in 2015 co-led by 8VC’s predecessor, Formation 8, with Sound Ventures that was backed by Stanford-StartX Fund – a vehicle affiliated to Stanford’s StartX accelerator – and Innotech Capitals, according to TechCrunch and deals database PitchBook.
Neighborly had previously graduated from the now-defunct Tumml accelerator.
